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The Asia Pacific Region – Finding Canadian links

I recently appeared before the Canadian Standing Senate Committee on Foreign Affairs and International Trade to speak about the Asia-Pacific region. The following is a summary of my opening remarks.

Asia Pacific represents the fastest growing region of the world and is becoming increasingly influential in determining global economic trends. Canada will need to find appropriate links with this region for its own prosperity.

The rapid economic growth that started in Southeast Asia has now spread to South Asia. Virtually all countries have bought into the export -oriented market based economic models. Even Burma is inching towards it. The days of the “babu” raj or state domination of the economy are ending.

These countries are also generally embracing a pluralistic form of government and dealing with questions such as accountability, democratic practices and rule of law. Some like India and Singapore have become mature democracies.

The region is vulnerable to environmental calamities like tsunamis, cyclones and floods, exacerbated by climate change. Island countries like Indonesia and the Philippines are particularly exposed. Portions of countries like Vietnam, Bangladesh and Maldives will go under if the sea level continues to rise. Rapid changes in governance structures and emphasis on economic growth with inadequate attention to sustainability have given rise to further fragilities like weak or inadequate institutions and man-made pollution.

An increasingly integrated Asia

People often talk about South Asia and Southeast Asia like they are two different worlds. This is not the case. They are increasingly part of one integrated Asia.

Economic integration is being driven by demand and supply for goods and services. Ernst and Young in a report on Asia suggest that “Over the next 10 years, Asia will […] become the world’s fastest-growing consumer market. Rising incomes will propel millions of Asians into the middle class, affecting not only intra-regional trades, but also global trade. […] Through vertical specialization, the contributions of these economies are increasingly complementary, enabling every country in the region to thrive.”[1] This complementarity is not only in terms of trade but also in terms of intra-regional investments.

Integration will also be driven by the emergence of regional hegemonies, as India and China become economic and geo-political superpowers. An Asia for Asians model is emerging as Asia Pacific countries are increasingly following independent policy tracks.

What these trends mean for the Canada- Asia relationship

Distance makes relationships tougher to establish, maintain and nurture. In terms of economic links, we need to find the most efficient, mutually beneficial partnerships given this distance. This may mean looking at Asia as a whole rather than parts of it. Costs will obviously play a part. Buying manufactured products from there makes sense because it is less costly than making it here.

What about the other way round? We will need to look for products that are knowledge and capital intensive – products that are less costly to transport or use alternative communication and transportation vehicles like the Internet. Examples could be education services or high-end designs.

Natural resources are interesting and have drawn the attention of the Chinese and the Indians. In fact, these countries now invest more in Canada than Canadians in those countries. Canadian mining companies are major investors in global exploration for non-renewable resources. This represents an interesting possibility in that Canadians are world leaders in some extractive technologies.

What about development links? Canada has a reputation as being genuinely interested in the well being of the people and development. However, as these economies become middle-income countries, scope for traditional development assistance becomes narrower and appropriate only for the few remaining low-income countries.

The concept for working with MICs will have to be one of genuine development partnership. Given the emphasis on economic growth in many of these countries, these development partnerships with have to include the private sector. Development partnerships will also need to include participation in global efforts to combat climate change.

Dr. Syed Sajjadur Rahman has over 25 years of experience in international development, having occupied a number of senior executive positions at the Canadian International Development Agency and having taught graduate-level courses at both Carleton University and the University of Ottawa. Specialized in economics, Dr. Rahman has in-depth knowledge of strategic planning and policy, as well as the structure and administration of bilateral and multilateral development organizations. Currently, Dr. Rahman is a Senior Associate at the Universalia Management Group. You may contact Dr. Rahman at sibgat@rogers.com.